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Tokyo Game Show Conversations: Bandai's Makoto Iwai

On September 29, 2005, Bandai and Namco entered into the management integration phase of their previously-announced merger plans. The new company, Bandai Namco Holdings, hopes to create a synthesis of the respective parent companies’ strengths, and thus form a stronger player in the videogame market. At the Tokyo Game Show 2005, Gamasutra spoke with Makoto Iwai, manager of international business, Video Game Department, Bandai Co. Ltd, about his thoughts on the merger, the state of the Japanese industry, next-gen, and how to compete with the west.

Gamasutra: So what are the developments of the merger between Bandai and Namco, from your perspective?

Makoto Iwai: Well, Namco has the power of internal development, and Bandai has the power of producing. So if we put that together, maybe we can create something new. That’s what we’re expecting, anyway.

GS: Is it somewhat similar to the Square Enix merger?

MI: I’m not sure if this is how Square Enix did it, but our plan is to merge 50/50. A merger, not an acquisition. But since Square has their strong internal development team, and Enix has more on the production side, in that sense, it might be a similar situation.

GS: What was the reason Bandai and Namco decided to merge?

MI: It’s an over-simplified answer, but basically Bandai’s main business is toys, and Namco is of course primarily a game company. And if you take a look at the Japanese domestic market by itself, the market size is shrinking. So we had been thinking about what to do for the future. And it doesn’t mean that Namco and Bandai weren’t doing well. We were doing quite well, but we figured we needed to prepare for the rainy days ahead. That’s what the company has been feeling for some time, and we’d been looking at various possibilities. It just happened to be Namco and Bandai that converged, and were both looking for an opportunity like this. We sort of had a similar culture within our companies, not like Sega and Bandai. A while back we had plans to get together with Sega, but it fell through. Our company culture was totally different, and we had no idea until we actually entered talks with each other. It’s just a matter of chemistry.

GS: Are you at all concerned about Western publishers moving into the Japanese market, and is this a move to strengthen your position in the western market?

MI: I don’t know if it will strengthen our position per se, but you are of course aware that with the next-generation, the technology and staff required will be much greater. Development costs will be huge. So as a company, Bandai had to think about a way of recouping development costs. Could be double, or triple, I don’t know. But everybody has to think about going global now. Japan used to be a major market, but now it’s much smaller than the U.S. and Europe. Every single Japanese company is looking for a way to expand into those markets. So part of our strategy is of course to go global.

GS: So what’s your global plan, then?

MI: Well, Bandai’s titles are generally pretty niche-market. But Namco is rather well known, they have successful franchises like Tekken, Soul Calibur, so by joining together, we create more market power for the retail market with out branding and production power. Actually the company as a whole is going more local, meaning that we’re trying to expand the Japanese market as other companies turn their sights outward. But through the merger, we’re trying to create something new for the Western markets as well. Right now we’re looking at that very seriously.

MI: Well, the gaming market is the main thing that Bandai and Namco have in common. In other respects, the companies are quite different, so we’re mostly looking into how to enhance that aspect of the business. I think we can take advantage of the more multimedia-oriented consoles that are coming out though, Xbox 360 and PSP for example. It’s a good chance to do something different…we need to relate our products to the new lifestyle of gamers, that is to say, take a new approach through various media. Games used to be played just sitting in front of the TV in the living room, and it’s been like that for many years. Now as technology improves, we’re seeing that change. You can bring your games wherever you want, you can play with whoever you want, and it’s really changing the landscape of games. Companies have to adjust to that.

GS: Are the companies going to be sharing resources, such as development techniques and technology?

MI: I think it might be too early to say, because while the merger process has officially just begun, we haven’t seen that many changes yet. But that’s one thing we’re looking at, especially for next-gen.

It’s true that Japanese developers don’t usually interface directly with each other…it’s quite closed, on the surface. But it doesn’t mean that we don’t communicate. Developers have their own blogs now, and on top of that there are more people moving around in the industry than there used to be, and practices and methodology can be shared that way too.

GS: I spoke with Namco’s Toru Iwatani last year (creator of Pac-Man), who said that in order to compete, Japanese companies were going to have to start sharing knowledge with each other. What do you think of that?

MI: Well that’s the way it should be, isn’t it? I agree with him – but it’s a slow process. We won’t get there right away.